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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Employment income: basis of assessment for general earnings: assessments made after a change of practice

Section 709 ITEPA 2003

There is a special rule relating to the assessment of income that has been taken into account in making deductions under PAYE. The rule applies if the assessment (or self-assessment) is made following a change of practice.

You only need to consider this rule if:

  • there has been a change of practice in relation to the taxation of an item of PAYE income and
  • the assessment or self-assessment is being made more than twelve months after the end of the year of assessment to which it relates.

The purpose of the rule is to prevent certain liabilities regarded as settled under the non- assessment procedure at EP3560 onwards being reopened. Details of PAYE income to which the rule applies are at EIM42450.

How the rule operates is at EIM42470.

See also EIM42460 regarding the decision in Walters v Tickner (66TC174) and the application of Section 709 ITEPA 2003 to income which is exempt from tax.

The application of Section 709 is a comparatively rare event. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)